Engage Marine Pty Ltd
[2021] FWC 5639
•17 SEPTEMBER 2021
| [2021] FWC 5639 |
| FAIR WORK COMMISSION |
REASONS FOR DECISION |
Fair Work Act 2009
s.318 - Application for an order relating to instruments covering new employer and transferring employees
Engage Marine Pty Ltd
(AG2021/7282)
Port authorities | |
COMMISSIONER HAMPTON | ADELAIDE, 17 SEPTEMBER 2021 |
Application for orders in relation to a transfer of business under s.318 of the Fair Work Act 2009 – orders seeking to provide that an enterprise agreement applying to former employer not cover the transferring employees – Order granted.
1. Background
[1] This matter concerns an application made under s.318 of the Fair Work Act 2009 (the Act) by Engage Marine Pty Ltd (Engage Marine) seeking that orders be made in relation to industrial instruments covering it as the new employer and certain transferring employees.
[2] The broader context for this application is not in dispute 1 and includes the following:
• In August 2021, CSL Australia Pty Ltd (CSL) announced that it had decided to award a contract for the supply of towage services (Towage) for the Port of Whyalla in South Australia, including its transhipment operations, to Engage Marine.
• Engage Marine is a port operations provider which services include towage operations, integrated port operations, marine consultancy, work vessels, line boat services and draught surveying across Australia including in Western Australia, Queensland, South Australia, Tasmania and Victoria.
• The Port of Whyalla is primarily a privately operated Iron Ore export Terminal operated exclusively by SIMEC Resources (SIMEC). SIMEC outsource its transhipping requirements to CSL.
• Prior to the most recent events, the Towage was conducted by Svitzer Australia Pty Ltd (Svitzer). Employees employed by Svitzer to perform towage services at the Port of Whyalla are covered by the Svitzer Australia Pty Limited National Towage Enterprise Agreement 2016 (Svitzer Enterprise Agreement).
• Engage Marine commenced operating the Towage at Whyalla on 7 September 2021. Engage Marine is seeking to engage the (former) employees employed by Svitzer, who are working at Whyalla.
• Engage Marine employees who are not Transferring Employees are covered by the Marine Towage Award 2020 (Award). Engage Marine has commenced discussions with crew members and will continue to establish what is has described as a “Workers Cooperative” to cover its operational employees including the Transferring Employees.
• On 31 August 2021, Engage Marine concluded its recruitment process in connection with the Whyalla operations, and 13 employees, have been offered employment to transfer from Svitzer to Engage Marine (together the Transferring Employees).
• Engage Marine has made offers of full-time employment to those 13 employees. Those offers of employment, if accepted, will see the employment of these Transferring Employees move to Engage Marine from Svitzer. If not accepted, those employees may remain employed by Svitzer or made redundant by their current employer.
• The offers of employment have been made contingent upon the Orders sought in this application being granted.
• All 13 Transferring Employees have verbally acknowledged that they would accept the formal offer of employment and would prefer to be employed by Engage Marine and remain at the Port of Whyalla. Subsequent to the application being lodged and immediately prior to the hearing, the Transferring Employees have each signed and returned the offers of employment to Engage Marine.
• The Award will cover all other (non-transferring) operational employees working at Whyalla who are employed by Engage Marine. There will ultimately be a total of 36 employees, including the 13 Transferring Employees if they are engaged.
• The Transferring Employees will perform the same, or substantially similar work to that performed by the other Engage Marine employees at Whyalla.
• In the absence of the Orders as sought, if the Transferring Employees accept the offers of employment with Engage Marine, upon commencement they would be covered by the Svitzer Enterprise Agreement by virtue of s 313 of the Act.
[3] Engage Marine seeks Orders that would provide, in effect, that the Transferring Employees be covered by the Award as opposed to the Svitzer Enterprise Agreement. Specifically, the Orders originally sought were as follows:
1. An order pursuant to section 318(1)(a) of the Act that the Svitzer Enterprise Agreement will not cover:
(a) Engage Marine;
(b) The Transferring Employees who will perform, or are likely to perform, the transferring work for Engage Marine; and/or
(c) any other Engage Marine employees.
2. An order pursuant to section 318(1)(b) of the Act that the Marine Towage Award 2020 will cover the Transferring Employees, until such time as a new Engage Marine enterprise agreement comes into operation. 2
[4] As part of the application Engage Marine advised it had agreed with the Transferring Employees that upon employment it would maintain in each case a salary and roster that is commensurate with the current operation and location.
[5] The Australian Maritime Officers’ Union, The Australian Institute of Marine and Power Engineers and the Construction, Forestry, Maritime, Mining and Energy Union (collectively the Unions) are all covered by the Svitzer Enterprise Agreement and were notified of the application and given an opportunity to be heard in this matter. The Transferring Employees were also notified and given an opportunity to be heard. 3
[6] The Unions and the Transferring Employees have not sought to be heard in connection with the application.
[7] Having heard the application on 13 September 2021, and subsequently sought confirmation of the position of the Unions, I made an Order4 on 15 September 2021 largely in the terms as sought. In so doing, I indicated that I would also publish reasons for that decision.
2. The Statutory requirements
[8] Section 318 of the Act provides as follows:
“318 Orders relating to instruments covering new employer and transferring employees
Orders that the FWC may make
(1) FWA may make the following orders:
(a) an order that a transferable instrument that would, or would be likely to, cover the new employer and a transferring employee because of paragraph 313(1)(a) does not, or will not, cover the new employer and the transferring employee;
(b) an order that an enterprise agreement or a named employer award that covers the new employer covers, or will cover, the transferring employee.
Who may apply for an order
(2) FWA may make the order only on application by any of the following:
(a) the new employer or a person who is likely to be the new employer;
(b) a transferring employee, or an employee who is likely to be a transferring employee;
(c) if the application relates to an enterprise agreement—an employee organisation that is, or is likely to be, covered by the agreement;
(d) if the application relates to a named employer award—an employee organisation that is entitled to represent the industrial interests of an employee referred to in paragraph (b).
Matters that the FWC must take into account
(3) In deciding whether to make the order, FWC must take into account the following:
(a) the views of:
(i) the new employer or a person who is likely to be the new employer; and
(ii) the employees who would be affected by the order;
(b) whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment;
(c) if the order relates to an enterprise agreement—the nominal expiry date of the agreement;
(d) whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace;
(e) whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer;
(f) the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer;
(g) the public interest.
Restriction on when order may come into operation
(4) The order must not come into operation in relation to a particular transferring employee before the later of the following:
(a) the time when the transferring employee becomes employed by the new employer;
(b) the day on which the order is made.”
[9] I also note that the exercise of the discretion given to the Commission in this regard is also guided by the object of this Part of the Act, which is stated as follows:
“309 Object of this Part
The object of this Part is to provide a balance between:
(a) the protection of employees’ terms and conditions of employment under enterprise agreements, certain modern awards and certain other instruments; and
(b) the interests of employers in running their enterprises efficiently;
if there is a transfer of business from one employer to another employer.”
3. The basis of the application
[10] Engage Marine relied upon the witness statement 5 of Mr Luke Bettesworth, Director – People and Culture. That evidence confirmed the background above and provided the following basis for the application:
• All 13 Transferring Employees verbally acknowledged that they would accept the formal offer of employment and would prefer to be employed by Engage Marine and remain at the Port of Whyalla. The Transferring Employees had subsequently confirmed that acceptance by signing and returning the employment offers. Engage Marine has agreed to maintaining a salary and roster that is commensurate with the operation and location, if/when they commence with Engage Marine.
• As to the proposed terms and conditions of employment:
• The Transferring Employees will receive a salary and roster that is commensurate with the current arrangements.
• Engage Marine will also be trialling an enhanced “family friendly” roster cycle of 2 days off for 1 day of duty, which if successful means that the Transferring Employees’ will benefit from an improved roster while maintaining the same salary.
• There are differences between the leave entitlements under the Svitzer Enterprise Agreement and those that employees will receive under the National Employment Standards. However, on aggregate, the terms are not substantially different between what employees will receive when they commence with Engage Marine, as compared to what they currently receive under the Svitzer Enterprise Agreement.
• If Engage Marine is not able to obtain the Orders sought by the application, the employees currently at Svitzer, may be made redundant or (potentially) be relocated to another tug operation in Australia. The security of a position at Whyalla with Svitzer would not be possible, while that security can be offered by Engage Marine.
• Engage Marine values the skills and expertise that the employees who are seeking to be employed by Engage Marine offer. The Company is proposing to give effect to the desire of the employees to be covered by the Award and be employed by Engage Marine at Whyalla.
• As to the concept of business synergy, employees who perform work at Whyalla and who are employed by Engage Marine, will all be covered by the Award. It would create industrial unrest and disputation if different groups of employees were receiving different terms and conditions of employment to perform the same or substantially the same work. Further, if Engage Marine cannot employ the Transferring Employees (in the event the Orders are not granted) then those employees are likely to be made redundant and Engage Marine will need to source labour externally.
• The Transferring Employees, who are the subject of this application, have consented to their new employment being subject to the Award for their own career progression and job security. Within the industry it is common knowledge that there are issues with job security and the reducing pool of resources. This application is supporting those individuals.
• Engage Marine would like to have employees voluntarily choose to move from the current employer to its employment, which is what has occurred. This is a situation which benefits both the employees and Engage Marine and is therefore squarely within the public interest.
4. Consideration
4.1 The jurisdictional basis of the application
[11] Engage Marine is a relevant employer for the purposes of s.318(2) of the Act and is eligible to make this application.
[12] I am also satisfied that there are transferring employees within the meaning of the Act and the Svitzer Enterprise Agreement would become a transferable instrument as a result of the statutory transmission of business provisions.6
[13] There is a valid application before the Commission.
4.2 The considerations arising for s.318(3) of the Act
Section 318(3)(a): The views of the new employer and the employees who would be affected
[14] Engage Marine has brought this application and clearly seeks that it be granted.
[15] The Transferring Employees are affected by the application and their views must be taken into account. The evidence about their views is indirect and I also acknowledge that the conditional basis of their offers of employment may be a significant factor motivating those views. However, given the opportunities afforded to the Transferring Employees, and the Unions on their behalf, to take issue with the claimed support or to oppose the application more generally, I find that these employees genuinely support the application.
[16] In this regard, I also observe that the Transferring Employees are industrially sophisticated.
[17] This consideration supports the granting of the application.
Section 318(3)(b): Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment
[18] There are many differences between the Award and the Svitzer Enterprise Agreement including the minimum rates of pay. There are also other more beneficial terms contained in that Agreement, including the hours of work arrangements.
[19] This consideration was discussed in the Supplementary Memorandum to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.7 Applying that approach, it is intended that while the terms and conditions of employment between an employer’s own industrial instrument and the transferable instrument may be different, the Fair Work Commission should satisfy itself whether “overall, the employees would not be disadvantaged”. This of itself may not prevent the granting of the application but in my view would generally represent a significant hurdle as part of the wider considerations which must be taken into account for the purposes of s.318(3) of the Act.
[20] In this case, Engage Marine has confirmed that the Transferring Employees will have the benefit of arrangements that maintain a salary and roster that is commensurate with the current operations and employment conditions. This is to be provided by the contracts of employment and the roster arrangements outlined as part of the application.
[21] In these particular circumstances, the employees are not significantly disadvantaged by the making of the orders sought.
Section 318(3)(c): The nominal expiry date
[22] The Svitzer Enterprise Agreement nominally expired on 31 December 2019. Even if the Order were not granted, the employees of Engage Marine would not have the benefit of any replacement enterprise agreement that was negotiated with Svitzer. However, there is no suggestion that the present instrument is not a relevant and contemporary package of terms and conditions.
[23] In that light, to the extent that this consideration might favour the granting of the application, it is only very marginally so.
Section 318(3)(d), (e) and (f): Productivity, economic disadvantage and business synergy
[24] The circumstances addressing these considerations have been set out earlier and the evidence before the Commission is consistent with those submissions. This includes the contention that if the application is granted, employees who perform work at Whyalla and who are employed by Engage Marine, will all be covered by the Award. This would avoid potential industrial unrest and disputation if different groups of employees were receiving different terms and conditions of employment to perform the same or substantially the same work. In addition, it contends that if the company was unable to employ the Transferring Employees (in the event the Orders were not granted), those employees are likely to be made redundant and Engage Marine will need to source labour externally. This, it contends, would be a disadvantage to both parties. Further, Engage Marine contends that the absence of sufficient qualified employees at the Port could lead to contractual consequences.
[25] Although I do not consider that a case of significant economic disadvantage has been made out, I do accept that there would be some disadvantage to Engage Marine should it be required to source the required expertise from external sources. The considerations under s.318(d) and (f) are broadly supportive of the application.
Section 318(3)(g): the public interest
[26] The public interest in this context is influenced by the objects of this Part of the Act in s.309 and those adopted by the Act more broadly.
[27] There is public interest in ensuring that agreed and statutorily approved arrangements are not put aside lightly and where they would cease to apply, the interests of the employees concerned are safeguarded. The absence of significant disadvantage, and the evident employee support for the change in this case, are important considerations.
[28] Further, there is also public interest in ensuring that the employment and skills of the present employees are utilised in this regional part of South Australia.
6. Conclusions
[29] Having considered all of the relevant matters I was satisfied that it was appropriate to make the Order, largely in the terms sought. In relation to that part of the application initially seeking confirmation of the coverage of the Award under s.318(1)(b), as acknowledged by Engage Marine, this instrument already covers the parties by virtue of the Act 8 and it is not an enterprise agreement or named employer award9 as contemplated in that provision. Further, if/when an enterprise agreement is made in this workplace, the Award will continue to cover the parties, but that agreement will cover and apply to the employer and employees concerned.10
[30] As a result, the Order provided pursuant to s.318 of the Act that the Svitzer Enterprise Agreement will not cover:
(a) Engage Marine;
(b) The Transferring Employees who will perform, or are likely to perform, the transferring work for Engage Marine; and/or
(c) any other Engage Marine employees.
[31] Section 318(4) of the Act provides, in effect, that any such Order must not come into operation in relation to a particular transferring employee before the later of the time when the transferring employee becomes employed by the new employer, or the day on which the Order is made. In this case I considered that it was appropriate to reflect the import of s.318(4) of the Act directly into the Order given that the transferring employees will be progressively engaged in the days following the making of that Order.
[32] As stated earlier, the Order 11 was made on 15 September 2021.
COMMISSIONER
Appearances:
S Williams of Kingston Reid, with permission for the Applicant, Engage Marine Pty Ltd.
Hearing details:
2021.
13 September.
By Video Hearing.
Printed by authority of the Commonwealth Government Printer
<AE417722 PR733702>
1 Supported by a witness statement – exhibit A1 and further information provided to the Commission during the proceedings.
2 This second aspect of the proposed Order was not pressed by Engage Marine for reasons set out later in the decision.
3 Arrangements were made to ensure that each of these parties were advised of the application and the capacity to make a submission before the matter was determined.
4 PR733772.
5 Exhibit A1.
6 Sections 312 and s.313 of the Act.
7 Revised Explanatory Memorandum to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009.
8 Section 48 of the Act – given the stated coverage of the Award the nature of the work in question.
9 Section 312 (2) of the Act.
10 Sections 48, 51 and 52 of the Act.
11 PR733772.
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